Dpt. You are showing your age. My beloved ex has all my I&S vinyls. Now I'll just have to go buy them on CD. Bought a Lovin' Spoonful the other day. I must be slipping into senility. Licking my lips all the time. Wondering where home is. Do you know who I am?
I have been trading longer than you, almost 3 years, but I am still stuck in the 5k/month range. Guys that I know who started later than me are making more because they can take greater risk with larger share sizes. I have a friend who gave me this piece of advice. Keep trading the way I am trading and if I feel comfortable, step it up a little by little. Sometimes I also fear that I might lose the edge and I will be forced to adapt to changing market conditions - like Jem mentioned. I want to hear some comments from fellow members. Should I take bigger risk before my edge runs out or should I take it slow and make consistent money, learn the markets, and trade for the long run. Steve, let me know how your trading goes when you trade more aggressively.
Buddatop, I don't know how you train yourself at the moment but you might want to try a type of interval training. When I learnt to type the program did speed then accuracy ... and by going back and forth improved both faster. Perhaps 1 day a week (your most "with it") you could psych up and take 20% bigger positions or more trades or whatever. Use self talk to get over the anxiety and doubt. 4 days a week work for your current consistency. By only doing it for 1 day a week you are not threatening your overall performance and are keeping the task finite. You might find it easier to step up that way. Should this work for you then increase the number of high load days each week.
Nana Trader "I will quite daytrading today, if someone can prove to me (reliable source with data) that it's 5% that make money over long term?" I have never seen a broker put out those statistics, but from what I gather it's probably true. As for proof, what brokers, who makes their money from your trading, are going to tell you, 95% or even over half lose money, and expect you to sign up. I don't think you're going to hear it. There probably is a place or places that have those statistics but they'll be darn hard to find. The guy that started this said he had $5K to start, you can't even day trade with that little amount. You could get lucky and swing trade that up to a decent amount but it will take time. As for the reasons why so many lose, there aren't enough hours in the day to list them, but being under funded would rank very high. After doing a lot of reading most traders who make money find out that no one knows which way the market is going to go, on daily basis. The Wall Street Journal and the business section of the paper will find some, "so called guru" to explain why it went up or down, but if you keep reading long enough you come to the conclusion that no one knows for sure. And the reasons that are listed for this week won't effect the market next month or even next week. A quick example. Remember a while back when oil was approaching the high 40 dollar a barrel the market sold off because most people feared that if it hit $50 everything would crash. Now, if the price stays in the low $50's or goes below $50 everyone sees that as a good sign. What moves the market now, might not effect it at all next week. The rules keep changing in this field, which makes making money is a lot harder than one would think. Trying to hit a home run, "Greed" is another killer. Fear of losing your money is another killer. Knowing you don't know what the hell the market is doing starts you thinking some of the other guys must know, and if you could only find them and do what they're doing you could make it. Look around, look how many people are willing to sell you their hot tips on what will be moving tomorrow. It's something you have to figure out on your own. This board and many others have many good ideas, but they don't always work. You can learn a lot by just reading what some of the others are trying. Remember there are no hard and fast rules. Things change all the time. If you have the time, go slow, watch and try to find what seems to work more then 50% of the time, don't get greedy, don't fall apart with fear, build your account up so a draw down of a few thousand dollars doesn't put you out before you get started. Find a honest mentor if you can, you then might be able to make money following your own set of rules and guides. Good luck on whatever you decide. Don
A list of the fifty most common reasons why most futures traders lose money. We surveyed more than a thousand experienced futures brokers and asked what, in their experience, caused most futures traders to lose money. These account executives represent the trading experience of more than 20,000 futures traders. In addition, most of these Account Executives (AEs) have also traded or are currently trading for themselves. Their answers are not summarized because different traders make (and lose) money for different reasons. Perhaps you may recognize some of your strengths and weaknesses. Yet, many of the reasons given are very similar from broker to broker and client to client. The repetitions stand to demonstrate that, alas, many futures traders lose money for many of the same reasons. Perhaps these statements from experienced brokers can make a contribution to you, who make this sometimes fickle, often intricate, always interesting marketplace of futures trading possible. Here is what they said: 1. Many futures traders trade without a plan. They do not define specific risk and profit objectives before trading. Even if they establish a plan, they "second guess" it and don't stick to it, particularly if the trade is a loss. Consequently, they overtrade and use their equity to the limit (are undercapitalized), which puts them in a squeeze and forces them to liquidate positions. 2. Usually they liquidate the good trades and keep the bad ones. Many traders don't realize the news they hear and read has, in many cases, already been discounted by the market. 3. After several profitable trades, many speculators become wild and unconservative. They base their trades on hunches and long shots, rather than sound fundamental and technical reasoning, or put their money into one deal that "can't fail." 4. Traders often try to carry too big a position with too little capital, and trade too frequently for the size of the account. 5. Some traders try to "beat the market" by day-trading, nervous scalping, and getting greedy. 6. They fail to pre-define risk, add to a losing position, and fail to use stops. 7. They frequently have a directional bias; for example, always wanting to be long. 8. Lack of experience in the market causes many traders to become emotionally and/or financially committed to one trade, and unwilling or unable to take a loss. They may be unable to admit they have made a mistake, or they look at the market in too short a timeframe. 9. They overtrade. 10. Many traders can't (or don't) take the small losses. They often stick with a loser until it really hurts, then take the loss. This is an undisciplined approach...a trader needs to develop and stick with a system. 11. Many traders get a fundamental case and hang onto it, even after the market technically turns. Only believe fundamentals as long as the technical signals follow. Both must agree. 12. Many traders break a cardinal rule: "Cut losses short. Let profits run." 13. Many people trade with their hearts instead of their heads. For some traders, adversity (or success) distorts judgment. Thatâs why they should have a plan first, and stick to it. 14. Often traders have bad timing, and not enough capital to survive the shake out. 15. Too many traders perceive futures markets as an intuitive arena. The inability to distinguish between price fluctuations which reflect a fundamental change and those which represent an interim change often causes losses. 16. Not following a disciplined trading program leads to accepting large losses and small profits. Many traders do not define offensive and defensive plans when an initial position is taken. 17. Emotion makes many traders hold a loser too long. Many traders don't discipline themselves to take small losses and big gains. 18. Too many traders are underfinanced, and get washed out at the extremes. 19. Greed causes some traders to allow profits to dwindle into losses while hoping for larger profits. This is really lack of discipline. Also, having too many trades on at one time and overtrading for the amount of capital involved can stem from greed. 20. Trying to trade inactive markets is dangerous. 21. Taking too big a risk with too little profit potential is a sure way to losses. 22. Many traders lose by not taking losses in proportion to the size of their accounts. 23. Often, traders do not recognize the difference between trading markets and trending markets. -------------------------------------------------------------------------------- Lack of discipline is a major shortcoming. -------------------------------------------------------------------------------- 24. Lack of discipline includes several lesser items; i.e., impatience, need for action, etc. Also, many traders are unable to take a loss and do it quickly. 25. Trading against the trend, especially without reasonable stops, and insufficient capital to trade with and/or improper money management are major causes of large losses in the futures markets; however, a large capital base alone does not guarantee success. 26. Overtrading is dangerous, and often stems from lack of planning. 27. Trading very speculative commodities is a frequent mistake. 28. There is a striking inability to stay with winners. Most traders are too willing to take small profits and, therefore, miss out on big profits. Another problem is undercapitalization; small accounts can't diversify, and can't use valid stops. 29. Some traders are on an ego trip and won't take advice from another person; any trade must be their idea. 30. Many traders have the habit of not cutting losses fast, and getting out of winners too soon. It sounds simple, but it takes discipline to trade correctly. This is hard whether you're losing or winning. -------------------------------------------------------------------------------- Many traders overtrade their accounts. -------------------------------------------------------------------------------- 31. Futures traders tend to have no discipline, no plan, and no patience. They overtrade and can't wait for the right opportunity. Instead, they seem compelled to trade every rumor. 32. Staying with a losing position, because a trader's information (or worse yet, intuition) indicates the deteriorating market is only a temporary situation, can lead to large losses. 33. Lack of risk capital in the market means inadequate capital for diversification and staying power in the market. 34. Some speculators don't have the temperament to accept small losses in a trade, or the patience to let winners ride. 35. Greed, as evidenced by trying to pick tops or bottoms, is a frequent error. 36. Not having a trading plan results in a lack of money management. Then, when too much ego gets involved, the result is emotional trading. 37. Frequently, traders judge markets on the local situation only, rather than taking the worldwide situation into account. 38. Speculators allow emotions to overcome intelligence when markets are going for them or against them. They do not have a plan and follow it. A good plan must include defense points (stops). 39. Some traders are not willing to believe price action, and thus trade contrary to the trend. 40. Many speculators trade only one commodity. 41. Getting out of a rallying commodity too quickly, or holding losers too long results in losses. 42. Trading against the trend is a common mistake. This may result from overtrading, too many day-trades, and undercapitalization, accentuated by failure to use a money management approach to trading futures. 43. Often, traders jump into a market based on a story in the morning paper; the market many times has already discounted the information. 44. Lack of self-discipline on the part of the trader and/or broker creates losses. -------------------------------------------------------------------------------- Futures traders tend to do inadequate research. -------------------------------------------------------------------------------- 45. Traders don't clearly identify and then adhere to risk parameters; i.e., stops. 46. Most traders overtrade without doing enough research. They take too many positions with too little information. They do a lot of day-trading for which they are undermargined; thus, they are unable to accept small losses. 47. Many speculators use "conventional wisdom" which is either "local," or "old news" to the market. They take small profits, not riding gains as they should, and tend to stay with losing positions. Most traders do not spend enough time and effort analyzing the market, and/or analyzing their own emotional make-up. 48. Too many traders do not apply money management techniques. They have no discipline, no plan. Many also overstay when the market goes against them, and won't limit their losses. 49. Many traders are undercapitalized. They trade positions too large, relative to their available capital. They are not flexible enough to change their minds or opinions when the trend is clearly against them. They don't have a good battle plan and the courage to stick to it. 50. Don't make trading decisions based on inside information. It's illegal, and besides, it's usually wrong. That was from a thread back in 2002 "Why Do Most Trders Lose Money?" http://www.elitetrader.com/vb/showthread.php?s=&threadid=10089&perpage=6&pagenumber=1
I think the best way to get over the "hump" is to just flat out double or triple your size without thinking about it too much; wait patiently for a premium setup, but when it all lines up just go for it. It's like anything else after the first time, you'll be much more comfortable on subsequent size trades, and that's the important part -- to eliminate any extra "nervousness" that would affect your judgement. It's only when you really believe "it's the same trade, whether 1 lot or 100", that it becomes true.
I did something similar. After trying to incrementally increase my size for the last two months I realized that unless it was much larger it was like a game, not like am I making my bread and butter. So I decided for one week and one week only I would trade the way I have been planning on and working towards for about 10 months. Low and behold it was almost the same trading %1 account risk as it was %.06. I had some of my bad habits come up, but I didn't crush my good trading and no disasters. So next week I am going to back off the risk and try to trade much much better. Then maybe I'll try another week run of the larger size. It seems I totally have to program my brain on a deep level that my decisions have a positive expectancy.
Most quit after they go broke once. There's a steep learning curve in trading. Perseverance. PS. Hey McCloud, how you doin'? *wink wink*